Chavez and all that oil (and gas)

A comment here about oil, and Hugo Chavez, but first ....

In the blog comment forums to which I contribute, my expressed opinions (only the tip of undoubtedly calamitous iceberg) are often aligned with those of leftist contributors. I sometimes feel I should do a monthly posting of my real ideological coordinates. Well, here they are.

The fact is, I almost never disagree with Paul Krugman except when I find some equally reputable economist pointing out that he's strayed off the reservation of economic received wisdom (and that's rare enough.) I think I'm as pro-market and pro-private property as it's possible to be, and still have some room for reason and compassion. And I think that if I'm wrong in those areas (I'm always willing to reconsider), I'm only wrong in the good company of some people who are a lot smarter than I am.

With that out of the way: Hugo Chavez is definitely using oil as both carrot (domestically) and stick (in foreign affairs.) Yes, he's effectively buying votes with oil money, and the only questions this behavior poses are whether he's buying them in the right way, for the right purposes. Is he an Allende? A Peron? A Castro in the making? Oh, I'm sure some of you see an embryonic Pol Pot if you squint at him sideways. Well, forget all that: he's a product of circumstances and systems, first and foremost, and oil is a big component of both. A focus on his personality or particulars of rhetoric is really beside the point. If not Chavez, it would probably be someone else not terribly different at this point in Venezuela's development.

Will the Venezuela oil windfall go away with dropping oil prices, leaving Chavez to hang? Don't bet on it. It's echoing around the business pages these days: we'll probably never see oil below $40/bbl again in our lifetimes. Even experts who feel certain that the recent runup is speculative frenzy are describing relief in terms of a return to around $43/bbl, not $23/bbl (where it was early this year - oh, how long ago that seems.) So Chavez is going to have his carrot-stick for a long time, a tuber-truncheon that any successor will inherit as well.

Oil is politically slippery stuff. It seldom brings out the best in a developing nation, and more often only makes things worse - see Nigeria, Equatorial Guinea, and earlier, Indonesia's kleptocratic snakepit of oil corruption, yielding the OPEC's first BANKRUPT national oil industry. If you're Norwegian, of course, not to worry. You were already in mixed-economy democratic welfare-state paradise. North Sea oil just meant you could finance your kid's PhD, not just his M.A. But if you're Chadian, you do worry - Chadians looked around in dismay at their immediate Middle East neighbors, and decided to put their new-found oil earnings into an internationally monitored trust, to be spent on legitimate development priorities. In this, Chad may have only formalized and legitimized a program of social stability and improvement whose more socially-entrepreneurial Arab state precedent was ... well ... you won't like this. Chad was answering the question: "How can we become 1970s Libya without the Qadaffi?"

As well, oil is globally problematic for the environment. Guess which country has the highest CO2 emissions per capita? Yep: Kuwait, which probably has the most oil per capita, and no other source of energy anywhere near as cheap. It's adding up now. If you haven't felt some change in the air in recent years, you must be living in a freezer. It'll only get worse before it gets better, even under a ratified Kyoto Protocol.

Maybe it's time to recognize that humanity's petro windfall is not just everybody's problem, but also everybody's asset. The SF writer Kim Stanley Robinson - a Marxist in his view of capitalism's problems, if not in his mullings over solutions - said in a panel discussion recently that he'd like to see the Antarctica Treaty amended to creep toward us all at the rate of one degree of latitude per year. And it was a good point, because among the many ridiculous global inequities introduced by strictures of citizenship in a complex of nation states, geology has endowed some citizens with an equality much greater than others. Property rights in the sense of demarcations of land area is something I have no issue with. Mineral rights within national boundaries, however, have set global civilization some real issues. It's possible we'll see something like Robinson's scenario no matter what - the next major hydrocarbon fuel source might be ocean hydrates, most of which are outside the 200-mile EEZ areas, in a global commons.

Chavez is smart about this - he realizes that his 'revolution' is oil-financed, that the recent price run-up is just a small market windfall within a much bigger geological one, and so he talks up his South America energy independence plans. He aims to internationalize Venezuela's advantages to some extent, to spread wealth effects, at least through continental pipeline networks. In a United States of South America, with free flow of labor across borders, the oil wealth would in fact flow more freely, benefiting more than just Venezuelans, in the way that an oil strike in Texas or offshore Alaska benefits people in Boston through rippling economic effects. South America isn't there yet, and it may never be, but for all the anti-U.S.-imperialism rhetoric, this program of his sounds as truly Bolivarian as it's practical to be right now.

South America is a huge continent, a whole world unto itself. It could be world with its own energy security, with some degree of common ownership of all natural resources. It could be a world where Venezuela's (and Brazil's) oil and gas belongs to everybody in it, but also a world in which everyone sees that the problems that oil and gas create are equally distributed. Or rather, UNequally distributed: global climate change will, after all, hurt the poor the most, and South America is bursting at the seams with poverty.

Problems are solved with models first. Africa needs a model. Central Asia needs a model. So do the Asia Pacific nations, with their wealth of oil and gas. This is one thing Chavez talks about that I'd like to see succeed. And it's about issues on which I think any fully rational pro-market liberal democrat might ultimately agree with a Marxist. After all, it's not getting any cooler out there.